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As part of its transformation to deliver a more affordable, clean energy future for Hawaii, the Hawaiian Electric Companies are proposing a new program to increase rooftop solar in a way that’s safe, sustainable and fair for all customers.

In conjunction with this “Transitional Distributed Generation” program, the utilities expect to be able to help the growth of solar by more than doubling the threshold for neighborhood circuits to accept solar systems. This would eliminate in most of those cases the need for a longer and costly interconnection study.

Under the proposal, existing Net Energy Metering (“NEM”) program customers and those with pending applications would remain under the existing NEM program. Any program changes from this proposal would apply only to new customers.

The initiative is part of the Hawaiian Electric Companies’ clean energy transformation to lower electric bills by 20 percent, increase the use of renewable energy to more than 65 percent, triple the amount of distributed solar by 2030, and offer customers expanded products and services.

“We want to ensure a sustainable rooftop solar program to help our customers lower their electric bills,” said Alan Oshima, Hawaiian Electric president and CEO. “That means taking an important first step by transitioning to a program where all customers are fairly sharing in the cost of the grid we all rely on.”

Jim Alberts, Hawaiian Electric senior vice president of customer service, added, “At the end of 2013, the annualized cost shift from customers who have rooftop solar to those who don’t totaled about $38 million. As of the end of 2014, the annualized cost shift had grown to $53 million – an increase of $15 million. And that number keeps growing. So change is needed to ensure a program that’s fair and sustainable for all customers.”

New Transitional Program

Currently, NEM customers use the electric grid daily. Their rooftop solar systems send energy into the grid, and they draw power when their systems do not provide enough for their needs, including in the evenings and on cloudy days. However, many NEM customers are able to lower their bills to the point that they do not help pay for the cost of operating and maintaining the electric grid.

As a result, those costs are increasingly being shifted from those who have solar to those who don’t.

The new transitional program would create a more sustainable system and ensure the costs of operating and maintaining the electric grid are more fairly shared among all customers.

Under the current NEM program, customers receive credit on their electric bills at the full retail rate for electricity they produce. This credit includes the cost of producing electricity plus operation and maintenance of the electric grid and all other costs to provide electric service.

The Transitional Distributed Generation program would credit customers at a rate that better reflects the cost of the electricity produced by their rooftop solar systems. This is consistent with how Kauai Island Utility Co-Op compensates its solar customers.

Increasing PV Integration

If this transitional program is approved, the Hawaiian Electric Companies expect to be able to modify their interconnection policies, more than doubling the solar threshold for neighborhood circuits from 120 percent of daytime minimum load (DML) to 250 percent of DML. In many cases, this will eliminate the need for a longer and costly interconnection study.

To safely integrate higher levels of solar, rooftop systems will need to implement newly developed performance standards, including those established using results of a collaboration among Hawaiian Electric, SolarCity and the Electric Power Research Institute. Through this partnership, the performance of solar inverters was tested at the National Renewable Energy Laboratory in Golden, Colorado. These standards can reduce the risk of damage to electronics in a customer’s home and to utility equipment on the grid, safety hazards for electrical line workers, and even widespread power outages.

The Hawaiian Electric Companies will also make strategic and cost-effective system improvements necessary to integrate more rooftop solar. They will work with the solar industry to identify areas where demand for upgrades is highest. Planning for these upgrades will also consider the needs of the State of Hawaii’s Green Energy Market Securitization (GEMS) program, which will make low-cost loans available to customers who may have difficulty financing clean energy improvements like solar.

To further support even more customers adding solar on high solar circuits, Hawaiian Electric will also be doing several pilot projects for “Non-Export/Smart Export” solar battery systems with local and national PV companies in Hawaii. These projects will provide real-world operational experience on their capability to increase solar interconnections on high-penetration circuits.

The company is also developing a community solar program as another option to help make the benefits of solar available to all customers, including those who may not be able to install rooftop solar (for example, renters or condo dwellers).

Hawaiian Electric is asking the PUC to approve the new program within 60 days. Under the utilities’ proposal, the Transitional Distributed Generation program would remain in effect while the PUC works on a permanent replacement program, to be developed through a collaborative process involving stakeholders from across the community, including the solar industry.

The PUC has stated it believes programs designed to support solar energy need to change. In an Order issued in April 2014, the PUC said:

“It is unrealistic to expect that the high growth in distributed solar PV capacity additions experienced in the 2010 – 2013 time period can be sustained, in the same technical, economic and policy manner in which it occurred, particularly when electric energy usage is declining, distribution circuit penetration levels are increasing, system level challenges are emerging and grid fixed costs are increasingly being shifted to non-solar PV customers.”

Across the three Hawaiian Electric Companies, more than 51,000 customers have rooftop solar. As of December 2014, about 12 percent of Hawaiian Electric customers, 10 percent of Maui Electric customers and 9 percent of Hawaii Electric Light customers have rooftop solar. This compares to a national average of one-half of 1 percent (0.5 percent) as of December 2013, according to the Solar Electric Power Association.

Solar power is a vital resource for Hawaii’s energy future. We continue to support it as an important option to help our customers lower their electric bills and help our state achieve the clean energy future we all want for Hawaii. In fact, our goal is to triple the amount of distributed solar power by 2030, with more than 65 percent of our energy needs coming from renewable energy sources.

We’re committed to continuing to increase rooftop PV, but it’s critical that it grows in a way that’s fair, safe and sustainable for ALL customers. To do this, we need to take the next step in the evolution of Hawaii’s solar policies and transition to a more sustainable system – one where ALL customers are fairly sharing in the cost of the grid we all rely on.

Currently, the cost of grid operations and maintenance is increasingly being shifted from those who have PV to those who don’t. At the end of 2013, that was an annual cost shift of $38 million. One year later, at the end of 2014, that annual cost shift had grown to $53 million.

On Jan. 20, we filed a motion with the Public Utilities Commission to address these important issues. A few highlights from our proposal:

Protect existing and pending Net Energy Metering (NEM) customers: We will honor the agreements with existing NEM customers and those NEM customers with pending applications. Proposed program changes would only apply to new PV customers.

Implement a new Transitional Distributed Generation (TDG) program to ensure costs are shared more fairly: If approved, the new TDG program would more fairly allocate fixed grid costs to PV customers and credit customers for the cost of the energy produced by their systems.

More than double the threshold for neighborhood circuits to allow for more PV: Pending approval of the TDG program, we would more than double the current threshold for neighborhood circuits to accept PV systems, eliminating in most of those cases the need for a longer and costly interconnection study. This is based on research done in collaboration with the National Renewable Energy Laboratories, SolarCity, and the Electric Power Research Institute.

What do you mean when you say you will more than double the threshold for PV?

We want to increase the threshold for neighborhood circuits to 250 percent of daytime minimum load, more than double the existing 120 percent threshold, eliminating in most of those cases the need for a longer and costly interconnection study.

Working with the solar industry – especially a partnership with the National Renewable Energy Laboratory, SolarCity and the Electric Power Research Institute — we’ve developed technical solutions that will make this increase possible.

Using these solutions will help us integrate even more PV on our grids, even in neighborhoods that already have very high amounts of PV.

Inverters serve as the connection point between PV systems and the grid. Upgrading the performance of inverters can help improve the management of the two-way flow of power between the grid and PV systems. This can reduce the risk of damage to electronics in a customer’s home and to utility equipment on the grid. It can also reduce the risk of safety hazards for electrical line workers or even widespread power outages.

(More detailed technical definition: Inverters are power electronic devices that convert DC electricity from PV panels to AC electricity that is used by a customer’s home or business equipment with excess energy exported to the grid. Inverters interact and synchronize with the grid’s frequency, voltage and power.)

In collaboration with several national and local PV companies in Hawaii, Hawaiian Electric will be deploying between 500-1,000 PV/Battery systems on circuits with already high amounts of solar. The projects can demonstrate how customer-sited PV systems leveraging newer advanced distributed energy technology can provide reliability benefits to the grid (i.e., support the grid services currently provided by central generation) and increase the amount of PV that can be added on high penetration PV circuits. By developing the practical, technical, standards and gaining operational experience now, we plan to offer widespread programs to all customers.

We’re proposing a new pricing structure for customers who install PV systems so that the costs of operating and maintaining the electric grid are shared more fairly amongst all customers who use the grid.

This would still provide customers with a good payback period on their investment. (For ref: On Oahu, the payback period would be roughly 9 years instead 5 years; On Hawaii — approximately 7 years instead of 4; On Maui — 6 years instead of 4. Based on January 2015 rates)

This new pricing would ONLY apply to NEW PV customers. Existing customers and those with pending applications would still be compensated under the current NEM program.

Under the current program, customers are credited at the full retail rate for electricity they produce – a rate which includes compensation for not only the cost of producing electricity, but also operations and maintenance of the electric grid and all other administrative costs of providing electric service. The transitional program would credit customers at a rate that better reflects the cost of the energy produced by their PV systems. This is consistent with how Kauai Island Utility Co-Op customers are compensated.

The proposed rate better reflects the cost of energy produced by their PV system (which is calculated based on the customer cost of purchased energy and fuel). These rates do not include any costs for operation and maintenance of the electric grid or any of the administrative costs of providing electric service.

We are committed to honoring agreements made with existing Net Energy Metering customers, and to those who have pending applications in the existing NEM program.

These customers will be able to continue under the NEM program, meaning they’ll continue to get credited for the excess solar energy their PV system produces at the higher rate. Also, to ensure customers are not caught in the transition, we’re also proposing that those customers with pending NEM applications be covered under the existing program. Under our proposal, we also allowed for additional megawatts of rooftop PV to account for some amount of new NEM applications that may be received through the time when the PUC makes a decision on our proposal. Molokai is an exception, as its small island grid has already achieved so much PV that the reliability of the entire system is at risk.

Once this capacity is met, new customers after that could participate in the transitional program.

That would be up to the PUC, but we propose that the transition program remain in effect while the PUC works on a longer term replacement program in the DER docket. That would be developed through a collaborative process involving stakeholders from across the community, including the solar industry.

We believe the transition program should remain in effect until the new program is approved by the PUC or until Jan. 1, 2017, whichever comes first.